Time for a people's bank? (letter)

by Selwyn Johnston

News Weekly, August 8, 2009

Sir,

In early July, a group of Australian economists published a proposal for the establishment of an Australian "peoples bank" (News Weekly, July 25, 2009). This proposal deserves both consideration and publicity, but unfortunately Canberra barely acknowledged it.

The proposal, however, did serve to remind the public that there was a time in Australia's history when we did have our own people's bank. In 1912, the Fisher Labour Government founded the Commonwealth Bank of Australia, including its own savings bank. The bank was brilliantly successful by funding Australia through World War I and financing the trans-national railway line to Perth, to mention just two of the major projects of that time. Not only was this Commonwealth Bank a people's bank, it was also a "bankers bank", acting as the reserve bank, which was also in control of the supply of Australia's currency.

Clearly, this success was detrimental to the profits of the already established "foreign" banks and, following Labour's loss of control of the Senate, the power of the Commonwealth Bank was promptly negated by moving from management by a "governor" to a board, which was clearly "manipulable". Consequently, the "foreign" banks quickly regained control of Australia's finances, and by the late 1920s it was all over.

There was a later attempt by then Prime Minister Ben Chifley to regain control of the banking system in Australia when his government passed the Commonwealth Banking Act 1945 and the accompanying Currency Act 1945. However, Chifley lost power in 1949 and both acts were repealed.

Given the 1929 "depression" and the present "recession", the question remains: can we afford to continue with our present "unregulated" Western-styled banking system?

The concept of a people's bank should again be seriously considered, and not brushed aside.